Consumers may be eager to make a run to their nearest reopened mall, but it may already be too late for many struggling retailers.

U.S. retailers will shutter 20,000 to 25,000 stores this year, according to projections from Coresight Research, with as many as 60% of those closures hitting U.S. malls. That marks a sharp increase from the 15,000 forecast earlier this year and raises the stakes for a sector already in turmoil before the coronavirus pandemic ushered the nation into a recession.

“Given that recovery to precrisis levels may be gradual, retailers that were struggling to stay in business precrisis are unlikely to have the wherewithal to stay the course on the road to recovery,” Coresight founder and CEO Deborah Weinswig said in the report released Tuesday.

Consumer spending, which typically drives 70% of the nation’s economy, hollowed out as much of the country went into lockdown in mid-March to combat the pandemic’s spread. In April, retail sales plunged a record 16.4%, far surpassing expectations. Analysts will keep a close eye on May retail figures, which could reveal the extent to which shoppers ventured out once states began easing restrictions on commercial businesses.

But for many brands, various phases of “reopening” won’t come soon enough. J. Crew, Neiman Marcus, J.C. Penney, Tuesday Morning and Stage Stores — which operates hundreds of Palais Royal, Bealls and Goody’s locations — have all filed for bankruptcy. Brooks Brothers is in talks with banks about financing for a possible bankruptcy that could come as soon as next month, CNBC reported. And Tailored Brands, which owns Men’s Wearhouse and Jos. A. Bank, is considering the same fate, according to Bloomberg.

Coresight has tracked more than 4,000 planned closures to date. Those include more than 900 from home-goods store Pier 1 Imports, plus hundreds more from nutrition brand GNC, Tuesday Morning and Victoria’s Secret.

Advertising

The retail sector was in transition well before the coronavirus recession. More than 9,800 stores closed in 2019. Brick-and-mortar storefronts have been grappling with declining foot traffic for years, steadily losing ground to e-commerce giants. And those housed in mid-tier malls that didn’t evolve fast enough were put further behind.

In pockets, some higher-end malls invested millions of dollars to reinvent themselves, drawing crowds with glitzy attractions like yoga studios, pop ups and microbreweries. But lower-tier properties only fell further behind, especially as anchor department stores dropped. Smaller tenants may be able to negotiate lower rents or break their leases if an anchor leaves, the report noted, contributing to “a ripple effect that spells bad news for malls.”

That disparity has only widened since the pandemic. Retailers with massive online platforms and extensive delivery systems, like Amazon, Target and Walmart, have seen orders surge.

“At the end of the day, the ‘haves’ have more and the ‘have nots’ have less — or have nothing, and therein lies the crisis,” said Mark Cohen, director of retail studies at Columbia Business School.

As with so much of the economy, the path forward may ultimately hinge on finding a vaccine and ending the pandemic. Even then, retailers who can hang on will face painful questions about paying rent, having the money to place advance orders, bringing employees back on the payroll and filling holes in their supply chains. Then comes the possibility that a second wave of infections could force additional lockdowns, Cohen said.

On top of it all, retailers are trying to solve what safe shopping even looks like. Among the options already on the table: temperature checks, shopping by appointment only and closing off bathrooms and fitting rooms.

“When they do open their doors, will the customers show up?” Cohen said. “Shoppers show this burst of energy, and it’s nice to see. But it’s not a trend.”